Why Buying an Investment Property Is the Best Way to Build Your Net Worth

Whether you have recently graduated from college or are getting close to retirement, it's likely that you have given some thought as to how you can grow your net worth.

You might have invested in stocks, picked up a few bonds or have a 401(k) plan set up to help fund your retirement. But have you considered buying real estate as part of your portfolio?

Why Buying an Investment Property Is the Best Way to Build Your Net Worth
Why Buying an Investment Property Is the Best Way to Build Your Net Worth

In today's blog post we'll have a look at three reasons why real estate investing is one of the most effective ways to grow your overall net worth.


Reason #1: It Generates Passive Income


One of the best reasons to hold real estate as part of your investment portfolio is that it can generate passive income in the form of rent. Whether you buy a single-family home or an apartment block, you can almost certainly find interested tenants who will live there.


Part of the rent you receive each month will cover the costs of owning and operating the property. The rest of it is income which will continue to build over time.


Reason #2: It Increases In Value Over Time


Another great reason to invest in real estate is that in most cases, it increases in value over time. As long as you are maintaining the property and investing in its upkeep you have a decent shot at it being worth more in the coming years, should you decide to sell.

Keep in mind that real estate is cyclical and that it's not always going to be the right time to sell and realize your gains.


Reason #3: You Can Leverage Equity To Buy More Properties


Finally, our third reason that real estate is the best way to build your worth is your ability to use it as leverage to buy more real estate. For example, say you decide to purchase a house valued at $100,000 as an investment property.


Once the mortgage on that home is paid off, you have an asset valued at $100,000 that you can then borrow against. So you can go out and acquire another $100,000 home without having to sell the first. As you can see, this can scale quite nicely over time.


Why hire a Property Management Company for Your Investment Property?


If you own Culpeper and Warrenton area real estate that you rent out, you already know how much work it is to juggle all the responsibilities of being a landlord. Being able to share that work with someone else is an obvious reason for hiring a property management company.


Here are five additional benefits to hiring a company to manage your rental properties:

  1. Stay up to date on legal issues: It’s difficult to stay on top of all the ins and outs of rental ordinances and tenant’s rights. Property management companies ensure tenant and landlord rights are not violated and that all state and local laws regarding rental property are followed. To help with this, property management companies often have an attorney on staff or on retainer.

  2. Free up more of your time: The property management company is responsible for the day-to-day operations of your rental homes. If the furnace goes out in the middle of the night, the management company gets the call, not you. They schedule routine maintenance and handle any repairs that are needed. Some management companies perform monthly inspections of your [city] real estate to identify any problems or tenants that are damaging the property.

  3. Screen potential tenants: Instead of spending your time interviewing potential tenants, running credit reports and checking references, you can spend your time on other things that you need or want to do. The property management company advertises your rentals and screens all potential tenants. Their job is to get you the best possible tenants for your rental home, and they know how to do it.

  4. Collect rent: The management company collects and deposits rent on all your rental properties. This cuts down on the accounting you must do on a monthly basis. Each unit is tracked separately, so you know which rentals are making the best return and which ones you might want to sell.

  5. Remove unwanted tenants: The management company is responsible for evicting tenants for non-payment of rent or improper care of your [city] real estate. They handle filing the paperwork and going to the court hearing, as well as the follow-up process. This is probably one of the most unpleasant landlord duties and one of the most difficult to implement without violating the tenant’s rights from lack of knowledge.

Get in touch with us today! Call 540.825.8100 or email us at info@vhsmanagement.com to learn more about our property management services. For more updates and information from VHS Property Management follow our blog and find us on Facebook @vhsmanagement.